BNY, the largest custodian bank in the world, is exploring tokenized deposits to enable clients to transfer funds instantly, 24/7, while easing constraints of its legacy systems.
Carl Slabicki, executive platform owner for Treasury Services at BNY, told Bloomberg that the project is part of an effort to upgrade real-time and cross-border payments, aiming to move a portion of its $2.5 trillion daily payment flow onto blockchain rails.
Tokenized deposits can help “banks overcome legacy technology constraints, making it easier to move deposits and payments across their own ecosystems – and eventually, across the broader market as standards mature,” Slabicki said.
Tokenized deposits are digital coins backed one-to-one by commercial bank money. Unlike stablecoins, which are often backed by securities or third-party reserves, tokenized deposits represent direct claims on commercial bank balances.
Cointelegraph reached out to BNY for comment, but had not received a response by publication.
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Goldman Sachs, BNY to launch tokenized money market funds
In July, Goldman Sachs and BNY revealed that they are teaming up to offer institutional clients access to tokenized money market funds, aiming to bring real-time settlement and round-the-clock market access to traditional finance.
The ownership of these funds will be recorded on Goldman’s private blockchain. The initiative includes participation from major players like BlackRock, Fidelity and Federated Hermes.
Money market fund tokens. Source: Copper.coBNY is also one of over 30 institutions working with SWIFT to build a shared blockchain-based ledger for real-time international payments.
Related: RWA tokens surge 11% weekly as onchain value peaks at $29B
Global banks test tokenized deposits for cross-border payments
BNY’s announcement comes amid a flurry of similar initiatives. JPMorgan launched its own tokenized deposit pilot, JPMD, in June. HSBC followed last month, rolling out a cross-border tokenized deposit service for corporate clients.
In September, SBI Shinsei Bank also partnered with Singapore’s Partior and Japan’s DeCurret DCP to explore multicurrency tokenized deposits for cross-border settlements. The trio signed an MOU to develop a blockchain-based framework that enables real-time clearing across various currencies.
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